Exxon Mobil profit falls as markets crash

Exxon Mobil posted its fifth straight quarterly profit decline after crude oil and natural gas lost more than 40% of their value because of global oversupplies.
Exxon Mobil profit falls as markets crash

Exxon is the latest of the super-major oil companies to disclose dismal fourth-quarter results amid the worst energy market downturn in a generation.

The benchmarks for international crude and US gas both dropped 42% during the final three months of 2015 as global production continued to overwhelm demand.

Oil is trading below $35 a barrel.

Fourth-quarter net income fell to $2.78bn (€2.56bn), or 67 cents a share, from $6.57bn, or $1.56, a year earlier, the Texas-based company said yesterday.

The per-share result beat the 63-cent average profit estimate of 19 analysts.

A $538m loss in the company’s US oil and gas business was cushioned by a near doubling in profit from Exxon’s refineries.

Output of crude and gas jumped 4.8%.

The company cut natural gas production throughout the Americas and Europe.

Brent crude futures averaged $44.69 a barrel during the fourth quarter, compared with $77.07 a year earlier.

US gas averaged $2.235 per million thermal units during the period, down from $3.829 a year earlier.

Oil and liquid byproducts comprise about 60% of output from Exxon’s wells; the rest is gas.

Worldwide oil demand growth probably will slow to 1.3% this year from a 1.9% rate of expansion in 2015, according to the International Energy Agency in Paris.

For Exxon, that contraction is expected to slash full-year 2016 profit to less than $13bn, based on the average of 19 analysts’ estimates, which would be the lowest since 2002.

Exxon’s stock dropped by 16% last year for the worst annual performance since 1981.

In December 2015, Exxon’s board promoted refining boss Darren Woods to the position of president of the corporation, signalling that he is in line to succeed chief executive officer Rex Tillerson as leader of the world’s biggest oil explorer by market value.

Mr Tillerson will reach Exxon’s mandatory retirement age of 65 in March 2017.

Meanwhile, oil dropped for a second day before weekly US government data forecast published later today to show crude stockpiles expanded further from a record, exacerbating a global glut.

US inventories probably rose by 3.75 million barrels through January 29.

“Although the bottom may be in, a rally doesn’t seem in the offing due to both the short-term crude supply-demand and muted buying from speculators,” said Seth Kleinman, head of European energy research at Citigroup in London.

“It seems likelier that we bounce around in the low $30s,” he said.

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